Decline in the Retail Lifecycle: Definition & Impact

Instructor: Beth Hendricks

Beth holds a master's degree in integrated marketing communications, and has worked in journalism and marketing throughout her career.

When retailers dip into the decline stage of the retail life cycle, it's because they've fallen into one of the four major failures that typically precede it. In this lesson, learn more about these causes of business decline.

Toys On The Decline

In early 2018, Toys ''R'' Us announced it was closing the doors of all of its nearly 800 stores after reporting $5 billion in debt through its bankruptcy proceeding. The retailer, which had been around since 1957, just couldn't climb its way out of the decline phase of the retail life cycle.

Decline in the retail life cycle, which is the last stage following introduction, growth and maturity, details the phase of an organization where sales are slowing and competitors are challenging the business. Eventually, unless changes are made, the business - like Toys ''R'' Us - vanishes from the retail landscape.

Experts have identified four major ways a retailer can experience the decline phase of the retail life cycle, with most having a single, clear underlying theme: a failure to innovate and change.

The Four Fronts of Retail Decline

Retail decline does not happen overnight. Instead, it is the result of a company experiencing one of these challenges.

Failure to Innovate

When a business is confronted by a competitor that is more innovative, they lose customers and market share. This eventually leads to the failure of the business. Companies must work to set themselves apart from the competition through constant innovation, whether by providing products or services customers can't find elsewhere or providing a convenience consumers just can't resist. Failure to innovate opens the door for competitors who are doing a more effective job on the cutting edge of their industry.

Uber's ridesharing concept demonstrated innovation in the space previously occupied only by taxi cab companies. Thanks to its new way of offering transportation, including mobile options to book and pay for rides, Uber has overtaken others an industry that once relied only on dialing a number to catch a ride, and cash payments only.

Failure to Meet Consumer Needs

Failing to meet the needs of their customer base is a second common reason for business decline. While other companies are taking the pulse of their customer base and figuring out what product features and services to offer, these companies are content to rest on their laurels and ignore the needs and wants of those who have kept them in business.

Remember the Blackberry? No, not the fruit, but the phone that rose to popularity in the mid-2000s. For a period of time, the Blackberry was the device to have, popular because of its full QWERTY keyboard and trackball navigation. Then, along came the iPhone, with its large, glossy screen and touchscreen keyboard. Blackberry failed to acknowledge the shift in what consumers wanted, discovering that the physical keyboard was much less important than the company thought. It signaled the start of the company's decline.

Failure to Meet Consumer Expectations

Thanks to growing technological capabilities that have brought a world of online options to consumers, expectations of retail businesses have grown. Companies that fail to meet their consumers' expectations have found themselves in the decline category of the retail life cycle and trying to climb out.

If you want to assign ''blame'' for rising consumer expectations, you might want to examine the Amazon effect. What first began as an online bookstore has grown to offer everything from toys to clothing to groceries. But the largest part of the Amazon effect is not what the online retailer offers, but how they do it. A Prime subscription will get you free 2-day delivery, and the company has toyed around with both same-day delivery for some locations, as well as things like delivery by drone or depositing a customer's purchases inside their home.

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